Q1 2019 RESULTS PRESENTATION9 May 2019
Q1 2019 FINANCIAL HIGHLIGHTS
2
41.636.8
Q1 2018 1Q 2019
KEY FINANCIAL HIGHLIGHTS
3
• The decrease in revenue was largely from Malaysia and Middle East and Africa markets whilehigher revenue from Indonesia and Philippines partially offset the impact
Revenue(S$’m)
Revenue by Geography(S$’m)
36.7
4.9
33.9
2.9
APAC EMEA
Q1 2018 Q1 2019
KEY FINANCIAL HIGHLIGHTS
4
Revenue (By Nature)
(S$’m)
Breakdown (By Nature)
65.5%
34.5%
28.3
13.3
24.1
12.7
Equipment Services & Maintenance
Q1 2018 Q1 2019
Q1 2019
Q1 2018
68.0%
32.0%
Strengthening recurring income streams by encouraging customers to take on services & maintenance contracts
EquipmentServices & Maintenance
KEY FINANCIAL HIGHLIGHTS
5
• Q1 2019 gross profit decreased in tandem with the lower revenue
• Other operating income for Q1 2019 rose 99.0% to S$0.2 million from S$0.1 million in Q1 2018 dueto a one-off foreign exchange gain
• The lower profit before tax and net profit recorded in Q1 2019 was mainly due to lower gross profit,partially offset by lower operating expenses
9.98.0
Q1 2018 Q1 2019
Gross Profit(S$’m)
Net Profit(S$’m)
1.71.4
Q1 2018 Q1 2019
2.2 1.8
Q1 2018 Q1 2019
Profit Before Tax(S$’m)
KEY FINANCIAL HIGHLIGHTS
Order In-Take by Geography(S$’m)
6
45.7
5.0
36.9
0.9
APAC EMEA
Q1 2018
Q1 2019
Total Order In-Take(S$’m)
50.7
37.8
Q1 2018 Q1 2019
Recent Contracts
Apr 2019: S$3.5m NI contract to manage cyber crimemonitoring hub, including professional services, for amajor service provider in South East Asia
Nov 2018: S$7.8m worth of NI contract to supply, install,commission and managed services of a Wi-Fi Infrastructurenetwork for a major Government entity in Southeast Asia
Aug 2018: S$11.8m worth of NI contracts to provide NIequipment and maintenance for a leading service providerin Southeast Asia
Jul 2018: S$3.2m contract to supply microwave links to agovernment entity in the Middle East (WIN)
Jul 2018: S$8.5m contract awarded by leading serviceprovider in Southeast Asia for provision of internet serviceinfrastructure (NI)
FINANCIAL POSITION
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S$’m Q1 2019 Q1 2018 Change (%)
Revenue 36.8 41.6 (11.4)
Gross Profit 8.0 9.9 (18.9)
Gross Profit Margin (%) 21.8 23.8 (2.0) ppt
Total Operating Expenses 6.4 7.7 (16.8)
Net Profit After Tax 1.4 1.7 (19.7)
Net Profit Margin (%) 3.8 4.2 (0.4) ppt
Basic and Fully Diluted EPS (SGD cents) 0.38 0.48 (20.8)
FINANCIAL POSITION
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S$’m 31 March 2019 31 December 2018
Current Assets 162.5 152.4
Current Liabilities 101.0 91.5
Net Current Assets 61.5 60.9
Total Assets 173.6 158.5
Total Liabilities 105.5 91.8
Total Borrowings 5.5 5.5
Cash and Bank Balances 19.5 21.6
Net Cash 14.0 16.1
NAV/Share (SGD cents) 18.80 18.42
OUTLOOK & STRATEGIES
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OUTLOOK – CHALLENGES
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• According to the IMF’s World Economic Outlook (WEO), April2019, the global growth is projected to slow from 3.6% in 2018to 3.3% in 2019, before returning to 3.6% in 2020
• Growth for 2018 was revised down by 0.1 percentage pointrelative to the October 2018 WEO, reflecting weakness in thesecond half of the year, and the forecasts for 2019 and 2020are now marked down by 0.4 percentage point and 0.1percentage point, respectively
US-China Trade Tensions• Singapore plans to start rolling out 5G mobile network
technology by 2020
• Due to the indicated timeline, Service Providers may not becommitting to a substantial CAPEX in 2019
• Additionally, there is a risk of 5G being rolled out at a slowerpace than expected due to the lack of consumer applicationsthat require the technology
Delay in 5G Roll-out
• Traditional businesses such as the hardware sales of radios andIP switches and routers are facing downward trends - thinningmargins due to intense competition
Declining Margins in Traditional Business
• High level of competition in the region over the past year,particularly by large international firms, such as HuaWei
• Service providers delayed technology adoption
• Steep Nigerian Naira depreciation over the US dollar
High Competition - Europe, the Middle East and Africa
OUTLOOK – GLOBAL
A Digital Transformation Initiative research by the World Economic Forum has identified 7 key technologies that are expected to have the
most impact among the industries analysed
Global Digital Transformation
Artificial intelligence
Autonomous vehicles
Big data analyticsand cloud
Custom manufacturing and 3D printing
Internet of Things and connected
devices
Robots and dronesSocial media
and platforms
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Estimated to deliver around US$100 trillion in value to business and society over the next decade
OUTLOOK – SINGAPORE
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Significant progress in government-led initiative, Digital Defence as
Singapore’s sixth pillar of Total Defence
Mobile service trial in 2019
5G roll-out by 2020
• New initiatives and expansion of existing schemes worthS$1 billion to help local companies build deep capabilities
• Cybersecurity market in Singapore was estimated at slightly lessthan US$500 million in 2017 and is expected to grow to reachUS$889 million in 2022 with a 15% CAGR
• The AI market (includes a wide range of technologies used toanalyse, organise, access and provide advisory services based on arange of unstructured information) in Singapore has the potentialto become a US$960 million market in 2022 and US$16 billion by2030 with a CAGR of 42.2%.
• Singapore’s IoT market size is estimated to be US$1.1 billionin 2022 at a CAGR of 20% from 2017 to 2022
• Start Digital initiative launched in January 2019 for new SMEs tostart their business right with foundational and competitively-priced digital solutions
• Increasing focus on guiding SMEs to adopt digital technology toimprove productivity and efficiency
Embracing Digitalisation Other Favourable Developments
80% of buildings to be certified by 2030
Sources:Ministry of Finance – Budget 2019 – Fostering a Caring and Inclusive SocietyInfocomm Media Development Authority, November 2018 – Services And Digital Economy Technology RoadmapInfocomm Media Development Authority, 4 March 2019 – Factsheet SMEs Go DigitalInfocomm Media Development Authority, 11 September 2018 – Full speed ahead for Singapore's digital transformation
OUTLOOK - IDENTIFIED BUSINESS VERTICALS
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Cybersecurity
>US$248.3BCybersecurity spending
(2023F)
10.2%
CAGR(2018 - 2023F)
Data Analytics
US$27.0BRegional big data and business analytics services
(2022F)
15.1%
CAGR(2017 - 2022F)
Automation
>US$16.9BNetwork Automation Market
(2022F)
48.7%
CAGR (2016 - 2022F)
A LEADER IN ENABLING TECHNOLOGIES
NeraTel’s Competitive
Strengths
Extensive regional reach and scale of operations
Over 4 decades of excellent track record
One of the largest team of certified engineers in Asia
Comprehensive technologysolutions
Enabling Our Customers
Value Creation:Through comprehensive solutions
Addressing Business Risk: Protect systems and networks to prevent the disruption of business operations
Competitive Edge:Uncover valuable insights through data analytics
Reduce Operating Costs: Automate processes to reduce the reliance on manpower
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DIGITISATION: A NEW GROWTH CHAPTER
AutomationAchieve operational efficiencies whilst reducing human error
Data Analytics
Identify insights to enable swift-decision making process
Cybersecurity
Secure digital assets to reduce the risk of losses arising from cybersecurity breaches
Service Providers
Enterprises
Transport
Governments
Utilities
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Synergistic Business Segments to Deliver Cutting-edge Solutions
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BUILDING A REGIONAL NETWORK
NeraTel’s Future Network
• Focus on deepening penetrationwithin existing markets in ASEAN
• Establishing presence in newmarkets in the region
• Identified potential newopportunities in Indochina
MYANMAR (Yangon)
PHILIPPINES (Manila)
MALAYSIA (Kuala Lumpur)SINGAPORE
INDONESIA (Jakarta)
VIETNAM (Hanoi)
THAILAND (Bangkok)
PAKISTAN (Islamabad)
AUSTRALIA (Sydney)
Outside of ASEAN
THANK YOUQ1 2019 RESULTS PRESENTATION